Changes to Rule 16 Effective January 1, 2018

Everyone’s favorite Rule is getting a makeover effective January 1, 2018.  There are several minor changes to the Rule that will impact prior authorization requests and ensure that a second opinion is timely obtained by the payer.  The major change that will take effect is to Rule 16-11(E) and the elimination of the option for the payer to request a hearing within the time-frames set forth in Rule 16-11(A) or 16-11(B).  The Division hopes to streamline the payer’s ability to contest prior authorization requests and ensure that a second opinion is obtained in a timely manner.  Rule 16 was previously revised and hoped to reduce overall litigation; however, the changes to the Rule contained some ambiguities and loopholes further ensuring that clarification was needed in 2018.


The current form of Rule 16-11(E) indicates:

Failure of the payer to timely comply in full with the requirements of section 16-11(A) or (B), shall be deemed authorization for payment of the requested treatment unless:


(1) A hearing is requested within the time prescribed for responding as set forth in section 16-11(A) or (B) and the requesting provider is notified accordingly.  A request for hearing shall not relieve the payer from conducting a medical review of the requested treatment, as set forth in section 16-11(B); or


(2) The payer has scheduled an independent medical examination (IME) within the time prescribed for responding as set forth in section 16-11(B).


This portion of the Rule took effect January 1, 2017 and is effective through December 31, 2017.  The Rule allows the payer to request a hearing within 7 business days of the receipt of the request for prior authorization.  However, it does not specify “when” the payer should conduct a medical records review.  It only indicates that the obligation is there for the payer to conduct one.  The Rule in subsection (2) also allows for an IME to be scheduled within 7 business days but does not delineate when the IME should take place.  For the claimant, significant delay is possible in waiting for the second opinion from the IME physician.  Theoretically, a payer could “schedule” an IME within 7 business days but have the IME take place at a much later date due to the availability of the IME physician.


The major changes that will be effective on New Year’s Day specifically indicate what a payer can due to contest a request for prior authorization, (if a medical records review is not possible), while taking into consideration the timeliness of obtaining the opinion for the claimant.


The new version of Rule 16-11(E) indicates:

Failure of the payer to timely comply in full with section 16-11(A), (B), or (C) shall be deemed authorization for payment of the requested treatment unless the payer has scheduled an independent medical examination (IME) and notified the requesting provider of the IME within the time frame prescribed for responding set forth in section 16-11(B).


(1) The IME must occur within 30 days, or upon first available appointment, of the prior authorization request, not to exceed 60 days absent an order extending the deadline.

(2) The IME physician must serve all parties concurrently with his or her report within 20 days of the IME.

(3) The insurer shall respond to the prior authorization request within five business days of the receipt of the IME report.

(4) If the injured worker does not attend or reschedules the IME, the payer may deny the prior authorization request pending completion of the IME.

(5) The IME shall comply with Rules 8-8 to 8-13 as applicable.



One aspect of the Rule that must be remembered by the carrier is the “first available appointment” portion of scheduling the IME.  As is usually the case, an IME physician will have a busy schedule and may not have an appointment within 30 days.  While an IME can still be scheduled up to the 60-day deadline with a physician of the carrier’s choice, this portion of the Rule must be complied with strictly so as to prevent delay in obtaining the second opinion for the claimant.


Another portion of the Rule that may create certain “arguments” is the duty on the IME physician and the carrier to have the report concurrently served on the parties within 20 days of the IME.  Although the Rule is silent as to what happens if the report is not concurrently served, or is late, the Rule still contains the original provision that a failure to comply is deemed authorization of the particular procedure.  The Rule appears to create an obligation on the payer to ensure that the IME physician is timely with his/her report.


Lastly, an ALJ always has the ultimate jurisdiction to determine whether a procedure is reasonable, necessary, and/or related to a claim since it will always involve a finding of fact.  However, there is also established case law indicating that a failure to timely comply with Rule 16 and/or a failure to timely authorize a recommended procedure from an authorized treating physician could be a continuing penalty situation in which an ALJ could find that the carrier acted unreasonably and that penalties should be awarded from the date of the request through the date of authorization.


It is always best to understand the particular changes to the law well in advance of when they take effect.  For any questions regarding the upcoming changes to Rule 16 and their application to a particular set of facts, please contact any of the attorneys at Lee + Kinder, LLC.




Colorado’s workers’ compensation subrogation statute, located at S 8–41–203, C.R.S., is poorly worded and has become more complex through legislative revisions over the years. At its heart, the statute allows payment of compensation under the Colorado Workers’ Compensation Act to operate as an assignment of a cause of action against another person or entity “not in the same employ” whose negligence or wrong produced injury or death for which benefits are paid. The right of subrogation applies to all compensation including medical, hospital, dental, funeral and other benefits. The assigned and subrogated case includes the right to recover future benefits. It extends to money collected from the third party that produced injury for all economic damages, physical impairment and disfigurement. The assigned and subrogated cause of action does not extend to money collected for non-economic damages awarded to the injured worker for pain and suffering, inconvenience, emotional stress or impairment of quality of life.

People familiar with workers’ compensation subrogation are aware of judicial apportionment between the injured worker and the carrier. Further, the carrier is responsible for any prorated share of fees and costs the injured worker incurred in obtaining a settlement or judgment from the third-party, should the carrier elect to not pursue the matter on its own. This can lead to significant uncertainty for the carrier in trying to determine whether to pursue the third-party on its own or come to an agreement with the injured worker for a percentage of gross or net recovery. In most circumstances the workers’ compensation case is open and moving forward while the third-party case is pending, whether filed or not. What to do with the third-party case is a complicated, multifaceted decision-making process; however, at least in some circumstances, the decision can be simplified by selling the recovery rights (although not technically a lien, I will refer to it as a lien in this article) to the defendant in the third-party case.


I recently had a case where sale of the lien made sense. The injured worker’s claim had been closed by settlement. Therefore, the total amount of potential recovery was known. The case involved a car accident where the injured worker was hurt in a rear-end collision. The total amount of insurance to cover the loss and liability of the negligent driver was also clear. The injured worker was pursuing the negligent driver in the third-party case and the workers’ compensation carrier elected to not bring its own cause of action. In settlement discussions in the third party case, it was clear that the negligent driver’s carrier would offer little or nothing to settle the case despite clear liability. The third-party carrier was willing to go to trial over causation of injuries that were largely compensated under the workers’ compensation system. Given these circumstances, I spoke directly to counsel for the injured worker to try to broker a deal on a percentage of potential recovery. We could not come to an agreeable percentage. I advised counsel for the injured worker that I was in discussions with the negligent driver’s carrier to have it buy my carrier’s lien. Since I could not come to an agreement with the injured worker’s attorney, I simply sold my client’s subrogation lien to the defendant in the third-party case. This guaranteed recovery for my client. The third-party case went to trial and the injured worker recovered no damages. The defendant in the third-party case submitted trial briefs asserting some set-off against potential damages based on the lien it purchased. The trial court held off any determination of a set-off. In the workers’ compensation case we had paid approximately $100,000, split evenly between medical and indemnity benefits. We sold the lien for $30,000. At issue before the trial court in the trial briefs was the value of the purchased lien. Was the purchased lien worth $100,000 set-off against billed medical, lost wages and permanent impairment claimed as damages in the third-party case? In the alternative, was the lien worth $30,000 as some undivided lump sum that can be set-off against all awarded damages? It is clear why the trial judge elected to not answer these questions, but let the jury come back with a decision on damages. The trial judge would have a difficult time figuring out what the defendant purchased from the workers’ compensation carrier and what it was worth. The jury saved the trial judge that headache since they found liability, but no damages. Regardless of the trial judge’s ultimate conclusion, my client’s had successfully recouped 30% of their lien and halted their exposure for on-going litigation expenses.


Counsel for the injured worker tried mightily to argue that respondents should reimburse the injured worker out of the $30,000 sale proceeds to account for its share of attorney fees and costs in the unsuccessful attempt to recover against third-party. Counsel for the injured worker was unsuccessful in all of his attempts. There was simply no legal basis to require the workers’ compensation carrier to pay for a share of unsuccessful litigation by the injured worker. That stated there is an appeal to the argument that it is unfair for the workers’ compensation carrier that did not actively participate in the negligent third-party case, to derive benefit from selling its lien without paying for the work done in the third-party case, even though it was unsuccessful.


Sale of the workers’ compensation lien is a viable option of recovery for respondents holding a subrogation lien; nevertheless, sale of the lien should only be done in certain circumstances. Sale of the lien when the workers’ compensation case is still open would not be recommended. Sale of the lien, for practical purposes, reduces any amount that could be used to settle the third-party case. This makes it more likely that that case will go to trial where the lien value will be used against the injured worker. This is not a good position for the workers’ compensation carrier. The workers’ compensation carrier still has obligations to claimant under the workers compensation system and in an open workers’ compensation case it should probably not sell its lien to the defendant in the third party case.

As a result of the lien sale in my specific case, there are rumblings in the claimant/plaintiff bar that they may try legislatively to prevent the sale of liens generated from workers’ compensation cases. As of now, no such legislation has been introduced.

We always recommend discussing this legal strategy with your counsel prior to embarking on this path. Whether the sale of a subrogation lien is viable depends largely on the specific facts of each case.